CNG kit smuggling in full force, say dealers

Major importers question the continued availability of equipment after government imposed ban.

KARACHI:

Vendors in Karachi still offering installation of CNG kits claim that they are using up remaining stocks. However, major dealers smell a rat and allege that such kits are being smuggled ever since the ban on legal imports of CNG equipment went into force six months ago.

Business for CNG kits installers is not as good as it was before December 15, 2011 – the date the ban on CNG kit imports was imposed. They have not been driven completely out of business, however, purportedly due to the ‘huge’ stocks that they accumulated before the import ban. Others believe that this is an excuse to cover for smuggled stock making its way into the market.

Major dealers say that the sharp rise in kit and cylinder prices immediately after the ban has only motivated smugglers.

Sheikh Zeeshan Sami, who retails at the CNG Kit Zone in Karachi, says that the kits installation business is almost dead these days, while survivors are eking out a living selling stock in hand. Sami says the ‘remaining’ CNG kits are being installed in newly-imported used cars along with other locally assembled cars.

Another kit installer claims that he wrapped-up his business owing to the sharp rise in kit prices. He said that kit installation cost was around Rs35,000 a few months ago: but after the ban, the same kits now cost Rs50,000 with installation and service charges.

“Our business has been reduced to a great extent. Since banks are not offering letters of credit (LCs) after the ban, it is very difficult to import kits now,” he tells our reporter.

Arshad Altaf, Managing Director of BRC – one of the two Italian CNG kit importers in Pakistan – informed us that his company’s operations are almost at a standstill since December last year.

“When the businesses of two leading players of CNG kits – BRC and Landi Renzo – are at standstill, how can installers keep up their business,” Altaf wondered. “There must be smuggling involved, because no small vendor can continue with his stocks for an extended period of six months.”

FBR spokesperson Riffat Shaheen Qazi, when questioned on the possibility of smuggling of kits, said that Pakistan has porous borders that cannot be sealed completely.

“We have clear instructions on different smuggling items, but I cannot rule out CNG kits smuggling from neighbouring countries,” said Qazi.

The two importers of Italian kits remain hopeful that the government of Pakistan will eventually lift the ban on kit imports. However, their hopes have dimmed over the months.

According to media reports, the Japanese Ambassador to Pakistan asked Commerce Minister Makhdoom Amin Fahim to lift the ban in March this year. The Japanese government was taking an interest in the matter owing to heavy investment of Japanese companies in Pakistan’s auto sector.

The spokesperson for Suzuki – one of the leading Japanese carmakers in Pakistan – said their company stocks of kits finished within a month of the imposition of the ban.

“The sudden import ban hit the businesses of not just kit dealers, but carmakers as well who have invested billions of rupees in the segment over the last couple of years,” he added. “Suzuki held an 80% share in company-fitted CNG cars in the country. Its business has been hurt the most among other carmakers,” he claimed.

Published in The Express Tribune, June 30^th, 2012.